After having recorded the highest EBITDA and profit after tax (PAT) in Q3FY15, DB Corp is confident of logging an even spectacular FY16. DB Corp Ltd, also known as the Dainik Bhaskar Group, is a leading print media company with its flagship Hindi daily newspaper, Dainik Bhaskar, Gujarati daily newspaper, Divya Bhaskar and Marathi daily newspaper, Dainik Divya Marathi.
In an interview to CNBC-TV18, Girish Agarwaal, director, DB Corp says the company’s strong performance comes on the back of elections in Maharashtra and Jharkhand.
“What aided numbers was also the fall in newsprint prices that declined by 5 percent (year on year) and 2.5 percent (quarter on quarter),” he adds.
On the road ahead, Agarwaal says he expects atleast a 10-20 percent growth in advertisements in Q4 and eyes one more edition launch in Bihar in FY16.
Below is the verbatim transcript of Girish Agarwaal’s interview with Sumaira Abidi & Reema Tendulkar on CNBC-TV18.
Sumaira: It is looking good for your company this quarter and what is looking even better is your operational performance. Can you take us through what is that it is aided this operational beat from your company?
A: The good announcement from our side is that this is the quarter where we have given the highest amount of EBITDA and the profit after tax (PAT) in terms of absolute number in our history so far. So we are almost at Rs 188 crore EBITDA for this quarter and Rs 105 crore of the PAT of this quarter. This despite of the fact that the topline grew only by around 7 percent in this quarter and the advertising income grew by around 8-9 percent so we are hoping that if this growth goes ahead in future with the economy catching up then I am sure we will have much better things to celebrate in future.
Reema: What was the decline in raw material prices in this quarter and how much therefore did it benefit your margins? What is the outlook on the margins going ahead can it improve? What would be the FY15 exit margins levels?
A: News print prices went down by almost 5 percent compared to the last year quarter. The quarter-on-quarter (QoQ) from Q2 to Q3 is around 2.5 percent decline. Indications for the next quarters coming in, there is a further decline of couple percentage coming more. So, that is the one advantage because almost 45-47 percent of my overall cost is news print. So, that is one area where I am getting some good benefit coming through.
Sumaira: You have seen a very strong operational performance like you said that it is the highest ever EBTIDA and PAT recorded ever. Now that, nine months are through for this FY15 what do you hope to finish the entire financial year with?
A: We only have largely two and a half months more to go and numbers would for this year stay at largely in the same range. However, going forward the policy that the government is rolling out and certain benefits coming out to the industry because we are largely depend on the advertising because almost 80 percent of my revenue is from the advertising. So from that perspective automobile, fast-moving consumer goods (FMCG), real estate, lifestyle they all need to really bounce back to take the advertising number up. Looking at the over all scenario things look like that are going to improve in the months to come.
Reema: With a near 5 percent decline in your news print prices you have managed to improve your margins by close to above 350 basis points at the EBTIDA level on a year-on-year (YoY) basis. Currently according to our calculations your operating margins are at about 33.3 percent. Do you think by the end of Q4 your margins could even inch towards that 35 percent mark?
A: I really cannot say because this also includes some benefits of the Maharashtra and the Jharkhand election which came in the revenue. So to say that margin will go up can’t say though I would love too.
Sumaira: What about your digital business, on an EBITDA level that is still continuing to make a loss? Going forward what is the kind of thrust that you are hoping to give to this digital business? When do you think it could break into the black?
A: In the digital business the whole idea is to grow and to make more investment. Currently we are sitting at; this month would be closed at around 18 million unique visitors and around 500 million page views on a monthly basis that is a big number.
On the advertising or on the revenue front we have got a growth of around 79 percent growth. The top line this year we would close at something like Rs 30-32 crore. Idea in this business is not to look at the bottom line at all for next couple of years because the size is too small. So, I would be more happy investing more money in this business to make some grounds for the future.
Reema: What is the outlook looking for Q4 in terms of the advertising revenue growth?
A: The prediction would be, say that it will be 20 or 10 percent but we have grown so far by around 8 percent in nine months and we feel that last quarter should improve this number.
Sumaira: How much better do you think your radio business could do from here? You have already seen margins in excess of 44 percent. How much better do you think this vertical could do for you?
A: If you look at the third quarter of radio, the overall growth went down to 7 percent because last year in the same quarter we had the election advertising revenue there. Otherwise the revenue has been growing at almost 25 percent and the margins in the range of 40 plus should continue to stay.
Reema: Overall what is the outlook looking, as you enter into the FY16? Do you think FY16 will be a better year for the company compared to FY15?
A: Certainly yes, because if you look at our Maharashtra market, where we are very optimistic and vey positive in terms of response. Similarly, the Bihar addition which we launched in the January of last year has been very encouraging response on the ground. We intend to launch one ore addition in Bihar, maybe in next financial year. So with all this there will a good growth for the company and also about the radio because of the next round of auctions which has to happen on the radio we are looking forward for that also. Considering all that next year is going to be interesting year for the company.
Reema: Will the company look to pass on the benefits of this raw material price decline or given it is subsidise do you think you will absorb it?
A: It depends on a market to market. In some market we are passing it on and in some market we are absorbing it.
Discover the latest Business News, Sensex, and Nifty updates. Obtain Personal Finance insights, tax queries, and expert opinions on Moneycontrol or download the Moneycontrol App to stay updated!
